Morgan Stanley's brokerage, which previously had Paulson on its watch list, has changed its status for Paulson Advantage to redeem.

Paulson, who famously bet against the subprime housing market, had a disastrous 2011. He's having a tough go of it again in 2012.

* An earlier version of this post said Morgan Stanley Wealth Management was dropping six Paulson funds. It's dropping two -- the Paulson Advantage and Paulson Advantage Plus, which are umbrella portfolios.